California’s summertime energy challenges are well-documented. While energy shortfalls appear less likely in 2023, thanks to the series of atmospheric rivers that drenched the Golden State this winter, we shouldn’t forget the painful lessons learned from the summers of 2020–2022, or pretend that this is anything other than a respite from a long-term trend. Instead, we can take this opportunity to identify the best path forward to reduce carbon emissions and improve the reliability of our energy system.
Grid Infrastructure Upgrades Needed
The root cause of our energy challenges is our aging, inadequate grid infrastructure. California’s grid cannot store, transmit, and deliver the state’s considerable renewable energy when and where it is needed. While the Strategic Reliability Reserve, established last year, will provide a band aid, it could end up a $5.2 billion investment in mostly fossil fuel infrastructure. This may mitigate the supply crunch in the short term, but it offers neither a long-term solution nor does it help meet climate goals.
We need new grid infrastructure, particularly transmission and storage capacity. Governor Newsom’s proposal to accelerate new infrastructure and clean energy projects is on the right track. However, even with reform, new transmission capacity can take more than a decade to build. As the climate rapidly warms, we cannot afford to slow the transition to clean energy while we wait for transmission projects, and no one wants to return to rolling blackouts and “Flex Alerts.”
SATA Is an Option
We can make progress while we build out grid infrastructure. New long-duration energy storage technologies can be deployed quickly and strategically to enhance the existing grid and better leverage renewable energy generation.
Storage-as-a-transmission asset, or SATA, can meet the needs of the grid much more quickly than new transmission capacity—in a matter of years, not decades. SATA would improve the utilization of existing transmission lines and absorb excess renewable generation when available, then disperse it during high-demand periods.
SATA projects are also scalable and flexible with the ability to adapt to evolving grid needs over time. California can add, subtract, or simply move storage capacity, reducing project risk and increasing system flexibility.
Time Is of the Essence
To make sure that we have this important tool at our disposal, we need to move quickly. Studies have shown that California will need up to 11 GW of energy storage by 2030 and 45–55 GW by 2045 in order to meet clean energy targets. California currently has roughly 5 GW of installed utility-scale storage. While this may sound like progress, not all storage is created equal. Most of the batteries installed today can only provide rated power output for four hours or less. These short-duration systems can provide important grid services but are not ideally suited to SATA applications.
Long-duration storage technologies, which can provide rated power capacity for four to 12 hours, or longer, are needed to bolster our transmission system and underpin the transition to renewable energy. By storing large volumes of power and discharging over extended periods, these systems can absorb excess renewable energy when generated and enable its transmission over off-peak periods, improving the utilization of existing transmission infrastructure without the need for new transmission lines.
Regulations and Market Structures Are Key
So how do we get there? To start, we need to get the rules right to enable their deployment.
Today, most transmission and distribution assets are owned and operated by regulated utilities. The California Public Utilities Commission (CPUC) is currently reviewing transmission siting regulations, including battery storage project permitting. This is an important start. However, to incentivize the addition of SATA and recognize the value that can be delivered to the grid, the CPUC needs to ensure that regulated utilities can include storage projects in their cost structures. This will put SATA on equal footing with other transmission investments by enabling cost recovery, improving the bankability of storage projects.
More broadly, we need to get market structures right. Non-utility owners of energy storage projects, such as independent power producers, and large commercial and industrial energy users, need the ability to realize reliable revenue for the value that they add to the grid. The California Independent System Operator (CAISO) can establish a revenue model to support a reliable return on storage projects while supporting a more sustainable, reliable energy system. The first step would be to enable storage resources to fully participate in operating reserve and other ancillary service markets.
With the right frameworks in place, energy storage can quickly address many of the challenges now facing the grid and reduce the future threat of rolling blackouts for everyone. California has an opportunity to reassert our leadership in the deployment of new technologies and achieve our ambitious climate goals. We just need to get the rules right so that new technologies can be deployed to address the big, intertwined challenges of energy reliability and climate change.
—Eric Dresselhuys is CEO of ESS Tech Inc., which provides long-duration energy storage systems.